Statutory Liability: Engineering Firm’s Success with Prompt Legal Support

Background

The insured is a civil and structural engineering consulting firm.  In 2021, the insured was engaged by a local council to provide structural design drawings for a cantilevered roof structure over the spectator terrace at a local sporting club (structure).  This structure was in the process of being constructed when in November 2021, there was a worksite incident when a roofing contractor employee was laying roof sheets and the structure collapsed.  Fortunately, no one was injured. 

In November 2023, the insured was served with a Summons by SafeWork SA alleging breaches of the Work Health and Safety Act 2012 arising from the incident.  The Summons alleged that the insured’s failure to provide an adequate design of the structure amounted to a failure to comply with its duty to ensure, so far as is reasonably practicable, that the structure is designed to be without risks to the health and safety of persons. 

The insured notified Berkley Insurance Australia (BIA) of the prosecution in late 2023 and Berkley promptly appointed one of its experienced WHS panel lawyers to represent the insured in the prosecution.

Indemnity

Indemnity was promptly granted to the insured pursuant to the Statutory Liability extension of the policy.

Liability

At the time of the incident, the insured investigated and found that its design of the structure was inadequate or defective and this was the cause of the collapse.

Outcome

If found guilty of the charged offences, the insured was exposed to a maximum penalty (for a body corporate) of $500,000 plus the costs of the prosecution.   However, if the insured plead guilty to the charges, it would be entitled to a maximum 40% discount which would reduce the maximum penalty to $300,000.

In light of the insured’s investigation findings and exposure, BIA’s panel lawyers recommended the insured plead guilty to the charges so as to minimise the potential penalty.  The insured agreed to this recommendation and pleaded guilty to the charges.  BIA’s panel lawyers assisted the insured by:

• negotiating with the WHS prosecutor the Statement of Agreed Facts (which were taken into account during sentencing);
• advising the insured and attending the sentencing process on behalf of the insured; and
• preparing written submissions for the sentencing hearing.

In May 2023, the Magistrate handed down their decision.  They recorded a conviction and ordered the insured pay a fine of $30,000 (taking into account the 40% early plea discount) plus the costs of the prosecution (which were nominal).  The insured was very surprised and overjoyed with the outcome considering it was expecting a significant fine/penalty.

Key Takeaways

• Notify BIA as soon as possible once there has been a workplace incident or accident involving an employee especially as it could take some years before any prosecution or investigation is formally commenced.
• BIA acted promptly in appointing its panel lawyers to advise and assist the insured during an otherwise stressful time.
• BIA’s panel lawyers are very experienced in their specialties and assisted the insured to minimise its exposure.
• For this claim, cover was available in relation to the $30,000 fine for WHS law contraventions plus the costs of the prosecution. This is because the relevant jurisdiction was South Australia. Some other jurisdictions in Australia have introduced prohibitions against insuring fines related to WHS law contraventions, although in these jurisdictions’ legal costs for defending WHS prosecutions may still be covered.

Related Articles

Amendments to WHS Legislation

What is Statutory Liability Insurance?

Why do you need Management Liability Insurance?

Important Notice

Berkley Insurance Company (limited company incorporated in Delaware, USA) ABN 53 126 559 706 t/as Berkley Insurance Australia is an APRA authorised general insurer. Information provided is general only, intended for brokers and has been prepared without taking into account any person’s particular objectives, financial situation or needs. It is not intended to constitute legal advice. You should always obtain legal or other professional advice appropriate to your own circumstances. Insurance cover is subject to terms, conditions, limits, and exclusions. When making a decision to buy or continue to hold a financial product, you should review the relevant Policy Wording.